February 22, 2011

Intel

Intel is opening up a new chip-manufacturing plant in Chandler. The $5 billion plant will be the most advanced, high volume semi-conductor manufacturing facility in the world. Jason Bagley, Intel's Government Affairs Manager, talks about the plant.

Ted Simons: Today's news on the jobs front comes after a huge announcement last week that Intel is opening up a new chip manufacturing plant in Chandler. The $5 billion plant will be the most advanced high-volume semiconductor manufacturing facility in the world. And it will create a lot of jobs. Here to talk about the facility is Jason Bagley, Intel's southwest government affairs manager. Good to see you again. Thanks for joining us.

Jason Bagley: My pleasure. Thank you.

Ted Simons: Why Chandler for this big, new plant?

Jason Bagley: Over the years, Intel has been able to deliver results out of Arizona. And these things don't happen in a vacuum. It requires really a community of effort to position the site, to be competitive and I think one of the primary drivers with this decision is the employee work base. And the employees here in Arizona have become so productive. They've been a deliverer of our products quickly and they've been able to ramp new technologies very quickly here, so we have a great track record. That coupled with the great relationship we have with the city of Chandler, working with Maricopa County, as well as the state has enabled us to create a very competitive climate for investment here. And so it was a natural place for Intel to make this investment, and the investment is very strategic. It positions us for our future growth and to be able to meet the capacity that our market is going to require.

Ted Simons: I want to get back to that employee work force, that base in a second here. But the plant will produce what, these 14 nano -- what are we talking about here? These micro, micro chips.

Jason Bagley: It sounds like magic when you try to comprehend what it is that we do. The product that Intel produces is really the most complex thing that humans manufacture on the planet. We have the world's leading manufacturing sites for semiconductor chips here in Arizona. This plant is going to produce the semiconductors on a 300-millimeter waver which is about that big. The chips that are on there will be produced at a 14 nano meter level. One nano meter is a billionth of a meter. Tiny tiny. To put that in perspective, it's about 1/90,000th width of a human hair. That's the kind of detail we'll be manufacturing of our products in this new plant.

Ted Simons: That's the reason this new plant will cost $5 billion? That's a lot of money. How come so expensive?

Jason Bagley: Our business is extremely expensive. That's why they're really just a small number of companies worldwide that can do what we do. Our business is very capital intensive. So the buildings themselves aren't that expensive. I mean, they're still billion dollar plus structures, but the real cost of our factories goes into the tools. If you can imagine football fields full of 10 to $40 million tools per tool that go into our clean rooms. They're extremely expensive and capital intensive.

Ted Simons: Let's talk about jobs here. How many jobs does Arizona see because of this announcement? And how many of those jobs are permanent?

Jason Bagley: With this announcement we're projecting thousands of new permanent Intel jobs, as well as construction jobs, to enable that project. We're not releasing the bottom line numbers yet on head count, but the site will -- in fact, we're hiring right now for the announcement that we made back in October which is converting our two existing factories at that same location. As we prepare to construct this new facility, we're going to be hiring that many more. So if you go on Intel.com and look under "Jobs" and search under the site, you're going to find hundreds and hundreds of jobs now open.

Ted Simons: I'm sure the site will get quite a workout after that statement.

Jason Bagley: I hope so.

Ted Simons: Are we talking about high wage jobs for the most part?

Jason Bagley: Intel employees in Arizona earn an average of about $122,000 a year. That's total compensation. So that's salary, bonuses, stock and benefits. So the overall compensation for an Intel employee here is pretty significant. We'll continue to push in that area.

Ted Simons: You mentioned quality work force. I know people like to hear that. Especially the quality of the schools and the universities. They like to hear that, but how much of that really was a factor? You're saying that's a pretty big deal?

Jason Bagley: It's a significant factor. The schools around our site, where our employees live are critical not only for our employees' quality of life and the education for their children and Intel employees get very involved in education and volunteer thousands of hours each year in the classroom, but our work at the universities is very significant. In fact, at Arizona State University, Intel hires more graduates out of that university than anywhere else, across all the disciplines that Intel employs. So we do hire a substantial number into Intel out of Arizona, but we do also pursue the top talent, the brightest minds of the world.

Ted Simons: The decision was obviously made in the past somewhere -- how long ago? What are you talking about here in terms of a timetable? Because some folks are wondering since this was announced so closely after the jobs bill, if there was some sort of factor there. Was there?

Jason Bagley: It's not related to the passage of the jobs bill this session. The decision was made a while ago, and Intel is continually looking at its product road map. Where do we need to go and where do we need to position our capital investments in order to facilitate that road map to address the market. So the decision was made independent of this bill. However, decisions that were made prior to this, policies that were in place prior to this absolutely impacted this decision. And it's helped create an environment where capital investment is valued and it's encouraged.

Jason Bagley: The R & D credit, the sales factor, foreign trade zone treatment for these very capital intensive sites. There aren't very many of them in Arizona, so it's kind of a unique situation. But it brings -- it brings the liability for a very expensive site where the valuation, if it were treated the same as all other businesses, it would be skyrocketing and just not very inviting. We simply wouldn't be making those investments.

Ted Simons: A couple of quick questions here. How many folks does Intel right now employ in Arizona?

Jason Bagley: Just under 10,000.

Ted Simons: And that will increase, won't it?

Jason Bagley: Absolutely.

Ted Simons: And when does construction start on this baby? And how long is it going to take before it's in operation?

Jason Bagley: When Intel makes a decision, we move fast. So we're going to begin construction on this new factory mid-2011. So very shortly. And we anticipate that it will be completed by the end of 2013.

Ted Simons: The State Legislature is working on a bill that would let Arizona lawmakers essentially nullify federal laws. Senate bill 14-33 would set up a committee of 12 lawmakers who could decide by a majority that Arizona does not recognize or need to live under a federal law. The committee would send a recommendation to the full legislature, which could then approve or disapprove the recommendation. There are other bills lawmakers are considering that would give a boost to states rights in Arizona. Here to give a legal analysis of the bills is Arizona State university law professor Paul Bender and Nick Dranias, director of the center for Constitutional government at the Goldwater Institute. Good to see you both. Thanks for joining us

Ted Simons: Paul, let's start with you and let's keep it as simple as we can for the host. Can states declare themselves independent of federal law?

Paul Bender: No.

Ted simons: No because?

Paul Bender: Because the Constitution says that federal law is the supreme law of the land. Couldn't be clearer. The Constitution of the laws of the United States which shall be made in pursuance in thereof all treaties shall be the supreme law of the land and judges of every state shall be bound thereby in any Constitution of the state. It can't be much clearer than that.

Nick Dranias: If there are laws unconstitutional, then states have no obligation to abide by them.
Paul Bender: You see, that's wrong.

Ted Simons: Why is that wrong?

Paul bender: Because you have an obligation to abide by them unless they're declared unconstitutional by an appropriate authority, and State Legislatures are not the appropriate authority. In this country we don't have State Legislatures declare the constitutionality of things. This whole Constitutional system is based on courts doing that. And so the right thing to do -- of course there's unconstitutional federal legislation, no question about that. The question is, what do you do about it? You don't declare it null and tell people not to obey it. This thing says that people don't have to obey it. And citizens shall not recognize to be obligated to live under the statute. If people take that seriously, they could go to jail because of this.

Ted Simons: Why not challenge particular laws that a state may have trouble with in federal court? Why not take them to court?

Nick Dranias: What I think is, as professor bender has it right in part, there's nothing wrong with states doing what James Madison suggested they should do in 1798 which is declare when federal law is unconstitutional in their opinion. From my reading of this bill, it does nothing more than that necessarily. Certainly our State Legislature has a right to say when the federal government has overstepped its bounds. It's important for demonstrating the political will to resist further unconstitutional actions by the federal government. Now, that doesn't mean you shouldn't go to federal court to bolster your case. I strongly believe that the supreme court does have ultimate jurisdiction over Constitutional questions and ultimately the supreme court should decide these issues. But in the meantime, State Legislatures should not remain silent.

Paul Bender: This is not about silence, though. If this bill simply said, we think the following laws are unconstitutional and they would have to specify which ones, that would be one thing. I think they shouldn't do that, but they have a right to do that. But this goes a lot further than that. This says, we nullify every federal law that we decide is unconstitutional without telling in advance which ones. Then they tell people, hey, don't obey them and ensure that the legislature adopts and enacts all measures that may be necessary to prevent the enforcement of any federal law. They say they are going to prevent the enforcement of any federal law that they think is unconstitutional. What do they have in mind? The national labor relations board has an office here and wants to send people in to staff that office. The legislature has to enact laws to stop that from happening? What, are we going to keep them out? Are we going to arrest them? It's not just we think it's unconstitutional and we're going to go to court about it. We think it's unconstitutional and we're going to nullify it and states can't do that. What does this remind you of? The only thing that this reminds me of is what the southern states did after brown vs board of education. They said we're not going to do that, we're going to desegregate. You know how that helped the south and what it did to the rest of the country.

Ted Simons: How do you respond to that? It sounds more what you're saying is this is a recommendation. More of a state saying this is unconstitutional, It sounds as though the law says we can nullify if this group of 12 decides the legislation and the supreme court says we agree with the legislation.

Nick Dranias: I think Professor Bender is overblowing this statute. It doesn't have to be interpreted the way he's choosing to interpret it. I do agree with him that it's unfortunate that the name nullification was used. My understanding is they're amending that. The state has the right, just as any individual, to declare when the state believes what the federal government is doing is unconstitutional. Further, it is fully Constitutional for the state to refuse to cooperate within matters that the state controls. In fact, the supreme court, I'm sure as Professor Bender has said, the federal government cannot commandeer the states in regards to their internal operations.

Paul bender: But obey federal law. There's a difference between commandeering to get the state to do what you want them to do to effectuate federal policy and obey federal law. If Nick were right about what this says, that would be something else. It does say what I said. The committee shall recommend proposed law and call for a vote by a simple majority to nullify in its entirety a specific federal law or regulation that is outside the scope of the powers. Then the legislature votes on whether to nullify it and then it says, if the legislature votes by a simple majority, they'll nullify any federal statute, this state and its citizen shall not recognize or be obligated to live under the statute. So they're telling a person who owns a business here, who runs a business and the federal government says you have to have a safe working place and the legislature says, that's unconstitutional, they're directing the citizen to disobey that federal law.

Ted Simons: "Shall not be obligated" kind of stands out there, doesn't it?

Nick Dranias: Yeah. I think Professor Bender is looking at this in the worst possible light. The way I read this, there are multiple steps and multiple recommendations made by a legislative committee. There's no reason to interpret the statute as Professor Bender does, as some sort of effort by the states to reject perfectly valid federal laws. Instead, I think it's far more likely the statute will simply be used to declare that the state will not follow unconstitutional laws as a protest, as was the original nullification concept that James Madison described in response to the Alien and Sedition Acts.

Paul bender: But even that's wrong. The state can't declare it's not going to follow federal law. We have a process of doing that in this country. If you think a law is unconstitutional, you challenge it in court. You don't announce to your citizens to ignore it. There's something going on here that is worse than just the words of this and it really does say what I said. I didn't make up those words. They're right in here. I think conservatives usually think you ought to pay attention to the words of the statutes. That's what I'm trying to do here. But there's a spirit behind this which is really bothersome. The spirit behind this is really against having a nation. When a state comes into the union, the state gets a lot of advantages for its people. We get defended. We get an interstate market that is very profitable. We prosper by that, and the state gives up some things. And what it gives up, it says right here in the Constitution. You have to obey federal law, and if you don't want to obey federal law, you challenge it through the system that's been set up to do that. Just think if every state did this, every state declared, hey, federal law -- federal law, they passed a speed limit, they passed a minimum wage law. We'll decide whether we want to do this in this state or not. You don't have a country anymore. Supposedly we think the war in Afghanistan is going badly, so we say Arizona can't fight in the army in Afghanistan. That's not a country and that's not what this country is supposed to be.

Nick Dranias: Professor Bender is fighting the last word and I would gladly join him in fighting the abuses of states rights in the 1950s and 60s. We're in an era now where the federal government has completely overreached. It's been attempting to mandate that individuals purchase health insurance, they've established various bureaucratic entities that can wield vast policies. Its time for the states to push the same envelope that the Federal government has been pushing for 70 years. States should declare when they believe federal laws are unconstitutional. There's nothing wrong with protesting, even by State Legislatures. Now, they should not say do not comply with federal law if there isn't a court decision that justifies that.

Paul bender: But don't you think they should do it on a case-by-case basis, law-by-law basis?

Nick Dranias: I think you're right, Professor Bender. I think the state should conduct this on a case-by-case basis. It will be used primarily as a vehicle for protest and not as a vehicle for resisting outside of court.

Paul Bender: How would that protest work? Suppose the legislature took out the language about that and said we're just going to declare it unconstitutional. What does that accomplish?

Nick Dranias: I think what it accomplishes is a manifestation of political will. And our nation, the idea that the federal government has overstepped its bounds is something that is not often heard in Washington, D.C. Washington, D.C. operates in kind of a bubble that doesn't pay much attention to what happens out in the states. So the mere fact that multiple states are protesting against federal overreach is valuable politically. It can spark reform. I venture to guess that regardless of where you are ideologically, if all of these smoke signals are coming up from these states saying we do not want to comply with federal laws, we think federal laws are unconstitutional, when you see these smoke signals, a wise politician, any political stripe should take a moment to think and pause about what is driving that.

Paul bender: The notion that Washington does not know what is going on in the states is bizarre. The people in Congress are elected, believe it or not, by people in the states. They go back to the states all the time. I worked in Washington recently. There is a lot of understanding there that people think the federal government is overreaching, that's not a problem. The problem I have with this is a problem of attitude. This is one country, and we all have to get along under certain rules of the game. And the rules of the game is, we don't ignore each other. You don't want the -- you want to ignore the federal government, how would you think if the federal government ignored you? Or suppose the state said a city had to do something and the city said we don't like that so we're going to ignore that. If any state police comes in to the state and arrests them, that's the kind of thing this threatens to do and it's really bad.

Nick Dranias: I disagree. I believe more speech is good. I think more debate is good. I think when State Legislatures join with their citizens in declaring that the Constitution has been violated or that the federal government has gone too far, that's a good dialogue to have.

Ted Simons: Got to stop you right there. I have another bill I want to mention. This is 1178. Feds can't regulate stuff that Arizona makes, why can't the feds regulate intrastate commerce?

Nick Dranias: Unfortunately for 70 years, the vast way the president says that the federal government has the implied power to regulate many aspects of intrastate, meaning internal commerce of the states, but it wasn't always the case. If you go before the era of the new deal, before President Roosevelt threatened to pack the court, before the switch in time save nine, you will discover that things like manufacturing and agriculture that did not involve direct transport of goods and services across state lines were regarded as exclusively within the jurisdiction of the states. So what I suspect this bill is attempting to do is create a vehicle for having the supreme court to reconsider where the 70 years of precedent has taken us. Now, do I think this is necessarily the vehicle that will likely succeed in our supreme court? No, I don't think it is that. But I do think it sends an important message, which is to go back to first principles. To question why the implied power of the federal government has been allowed to expand so far and hopefully start a dialogue that results in reform.

Paul Bender: Let me say a couple of things about that. First of all, the bill says that when goods are only within the state and transactions are only in the state, they're not subject to the authority of Congress under its Constitution. What Nick says is just wrong under current law. It's not a good idea to tell your citizens the Constitution is one thing when it means something else. More importantly, it's really interesting. You want to go back to before the new deal. This has been a really prosperous country since 1935, the most prosperous country in the world, the most powerful country in the world. That's what we are with what Nick thinks of as the federal government overreaching. I don't think it's an overreaching, but it's been a very good overreaching for the country. Why go back to what happened before the new deal? We were in a horrible depression. That's what you want to go back to?

Ted Simons: Why not pass laws that will prop core actions and will look at some things some folks think need some reconstruction.

Paul bender: If the federal government tries to regulate intrastate business, the person who is regulated will challenge that and it's the best person to challenge it and that challenge will go to court. That's what we do in this country. That's how the new deal legislation was challenged and that's how all legislation is challenged. So it's a process that's really worked. People think this is the greatest country in the world. It is. One of the reasons it's the greatest in the world, we have a system of federalism where we respect each other and the states respect the federal government and don't announce, you don't have any authority here.

Ted Simons: It sounds like process is a major play here.

Nick Dranias: Look, in a lot of respects in principle Paul and I agree. We have a federal system. But what we have forgotten is a federal system involves dual sovereignty. It involves the states being respected within the sphere of its sovereignty as well as the federal government being respected within its sphere of federal sovereignty. Within the last 70 years, it's been to diminish the sovereignty of the states. In favor of Federal Sovereignty. I think that threatens us all in the long run. I applaud efforts by our State Legislature. To rebalance and make a more equal partnership between the state and the federal government. In particular instances could things be getting a little bit overzealous? Possibly. I don't think in the application of these laws the more overzealous interpretation will be applied. To demonstrate there's a will in the states to say the federal government no more.

Ted Simons: Can you do it in ten seconds?

Paul bender: Yeah. Because the problem in that, it doesn't result in anything. It's just a political statement. Whereas the person who is regulated challenges it, it goes to court and it's decided. To have a legislature say we think it's unconstitutional, that just sits there. It doesn't help anybody with anything.

Ted Simons: Ten seconds.

Nick Dranias: It helps with a lot. It allows the state to serve its function, which is the check and balance of federal government.

Ted Simons: We've got to stop it right there. Great discussion. Thanks, gentlemen, for joining us.